Economy

Trump's tariff deal with China to benefit farmers

Trump's tariff deal with China to benefit farmers”

At the G20 summit, Donald Trump and Xi Jinping agreed to halt new trade tariffs for 90 days to allow for talks.

US President Donald Trump and Chinese President Xi Jinping have struck a temporary 90-day ceasefire to deescalate trade tensions between the world's two largest economies.

China, the world's largest car market, raised tariffs on U.S. auto imports to 40 percent in July, forcing many automakers to hike prices in a major hit to the about US$10 billion worth of passenger vehicles the United States sent to China past year.

Beijing cut import duties on foreign autos to 15 percent in July but added a 25 percent penalty for USA -made vehicles the following month in response to Trump's tariff hikes.

In a Tweet on Sunday night, Trump said: "China has agreed to reduce and remove tariffs on cars coming into China from the U.S. now the tariff is 40%". China, meanwhile, will buy an unspecified but "very substantial amount of agricultural, energy, industrial and other products", and expand its purchases of farm products immediately.

While Trump cited the US trade deficits with foreign nations as a reason for implementing the tariffs, the USA trade deficit with China has increased since the tariffs were announced.

On Monday, China's foreign ministry said the presidents of China and the USA had instructed their economic teams to work towards removing all tariffs following the G20 meeting, Reuters reported.

The tariffs stem from the Trump administration's demands that China make sweeping changes to its intellectual property practices. "But I will just tell you, as an involved participant, we expect those tariffs to go to zero".

The Buenos Aires deal shows that both sides are aware that the tariffs could damage the global economy, it said.

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Chinese news outlets also claimed both sides plan to eliminate all tariffs, which doesn't appear in the US statement.

The move, if confirmed, would be welcomed by a auto industry unsettled by the escalating US-China trade war. China's silence indicates that the two leaders likely discussed the issue and reached a tentative agreement during their dinner meeting. By midyear, soybean exports to China were down by 20.5%, according to CNBC.

Treasury Secretary Steven Mnuchin said on CNBC the USA and Chinese had "very specific discussions" in Buenos Aires Saturday evening on steps to defuse their conflict, which involves hundreds of billions in bilateral trade and had roiled world markets for months.

Speaking to reporters aboard Air Force One on Saturday, Trump said, "It's an incredible deal".

Asian stock markets opened higher on Monday in the wake of the truce, with Tokyo rising by one percent and Hong Kong and Shanghai rising by more than two percent.

The president also touted an agreement with China to reduce tariffs on cars entering China from the United States. As part of that the USA said it had agreed to hold off on raising tariffs Jan 1, while negotiations took place.

But as trade tensions ratcheted up with the USA this summer, Beijing retaliated by slapping vehicles imported from the USA with an extra 25 per cent tariff, bringing the total tariff rate to 40 per cent.

The BBC's Stephen McDonell reports that China "has pretty much given up nothing in this deal because the future tariffs threatened from the Beijing side were retaliatory in nature and only to be applied if the United State escalated".



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